Frequently Asked Questions about Non-Resident Ordinary (NRO) Accounts

The NRO Account is an Indian Rupee denominated and can be in the form of savings, current, recurring or fixed deposits. Same like the NRE account. The difference between a NRE & NRO is that in the NRO the income is deemed arise or accrue inside India. Since the income is deemed to be inside India, the taxes on the same follow. The tax that is applicable is the Tax deducted at source or withholding tax, as per the Indian tax rules and regulations. To learn more about NRO account, see the below FAQ's

NRO Account: Frequently Asked Questions

Who can open a NRO Account?

Any Non Resident Indian or Person of Indian Origin can open a NRO Account. Individuals from Bangladesh & Pakistan can also open NRO Accounts, but would need prior permission of Reserve Bank of India (RBI) to do so. A person can mean an individual, a company, a partnership, a trust etc. can open a NRO Account. Post Offices in India can open NRO Accounts.

Who is a NRI?

A NRI or Non Resident Indian is an individual who resides outside India, but is an Indian Citizen.

Who is a PIO?

A ‘Person of Indian Origin (PIO)’ is a person resident outside India who is a citizen of any country other than Bangladesh or Pakistan or such other country as may be specified by the Central Government, satisfying the following conditions:

Who was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955); or

Who belonged to a territory that became part of India after the 15th day of August, 1947; or

Who is a child or a grandchild or a great grandchild of a citizen of India or of a person referred to in clause (a) or (b); or

Who is a spouse of foreign origin of a citizen of India or spouse of foreign origin of a person referred to in clause (a) or (b) or (c)

A PIO will include an ‘Overseas Citizen of India’ cardholder within the meaning of Section 7(A) of the Citizenship Act, 1955. Such an OCI Card holder should also be a person resident outside India.

Can the NRO Account be a Joint Account?

Yes, the NRO Account can be a Joint Account, provided all the account holders are either NRIs or PIOs or any combination of the two.

What is the Currency of the NRO Account?

The NRO Account is an INR denominated account.

What kind of accounts can be opened as a NRO Account?

NRO Account can be a Savings Account, a Current(Checking) Account, a Fixed Deposit Account or a Recurring Deposit Account.

What is the period of Fixed Deposits or Recurring Deposits?

The Fixed Deposit or Recurring Deposit can be for a period as are opened for a resident, per the regulations of RBI. There is no special treatment of a Fixed Deposit or Recurring Deposit in an NRO Account.

What are the permitted credits into a NRO Account?

The permitted credits into the NRO Account are:

Inward Remittances from outside India

Interest Accruing on the account balance

Rupee Gifts or loan made by a resident to an NRI or PIO, within the limits of Liberalized Remittance Scheme (LRS)

Transfer from other NRO

Legitimate dues in India

Current Income like rent, dividend, pension, Interest etc.

What are the permitted debits from the NRO Account?

The permitted debits are:

Local Disbursements

Remittance outside India up to INR 1 million, subjects to the conditions in the Foreign Exchange Management (Remittance of Assets) regulations 2016

Transfer to another NRO/FCNR Account

Investments in India

How much can be repatriated abroad from the NRO Account?

NRO account balance cannot be repatriated. The repatriation can only be up to 1 Million INR and under the Regulations of FEMA (Remittance of Assets) issued in 2016.

What is the taxation on the NRO Account?

Income earned in the account is fully Taxed in India.

Can Loans be availed in India on the security of the NRO Account?

Yes, the banks can lend on the security of the NRO Account to the account holder or third parties, as per the general lending norms.

How can the loans be repaid if these are taken by the account holder?

The repayment of the loan can be done by inward remittance. It can also be repaid by utilizing the balance held by the account holder in their NRO Accounts.

Can Loans be availed outside India?

Loans outside India are not permitted under the NRO Account

What is the Rate of Interest of NRO Account?

The rate of interest on NRO Account are based on the directives of RBI under the guidelines issued by the department of Banking Regulations. The rates are the normal rates as are applicable to resident accounts.

Can the NRO Account be operated under a Power of Attorney (POA)?

Yes, the NRO Account can be operated under a POA. There are restrictions on the application of the POA. These restrictions are applicable to withdrawals for local payments in INR or remittance to the account from abroad. For sending money abroad the rules as above of 1 million INR apply.

What happens when there is a change in the status of the Non Resident to Resident, as regards NRO Account?

The NRO Account is then designated as a Resident account or the funds held in this account are transferred to a Resident Domestic Account, at the option of the account holder. When a resident moved abroad all his domestic accounts are to be designated as NRO accounts.

What is the time limit for the change of the account status of the person who becomes a Resident from Non Resident?

The account holder should immediately intimate the bank of the change of the status.

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